The quotation quoted is out of context. He plainly stated that he mistakenly thought that the late medieval church had embraced the notion that people could save themselves through good behavior. He added that some Catholic scholars also made the same mistake. Actually the church never embraced this concept which has been the center of much controversy over the past 5 centuries. Go back and read it once more. It take a lot of concentration to interpret the sentence.
Both of you need to read it again, with the next sentence (as above).
He's saying that he believed (past tense) and still believes the nominalists and scotists of the medieval church (not the present Roman Church), a very powerful part of late medieval Roman Catholicism, had distorted the doctrine of salvation with "a kind of 'Palagian' error." Also he is saying most present-day Roman Catholic scholars agree with this historical analysis. Of course the scotists and nominalists were not the whole church...(by the same token neither was Trent, for that matter...80%+ of its delegates were Italian).
Most Catholic scholars I've heard of ADMIT that the Renaissance-era Church had some very serious issues, beyond simple corruption, which provided fertile ground for schism in the Reformation.
To stonewall and almost say that Rome has always been right on everything doesn't reflect the teachings of Benedict or John Paul II, or the consensus of the present leadership of the Church.